With Computacenter once again topping the charts in this year's Top VARs, we caught up with UK managing director Neil Muller (pictured). He talked us through a stellar year for the UK's biggest VAR, and told us why employees that go the extra mile are the key to keeping Computacenter ahead of the game.
CRN: Did the success of 2012 exceed your expectations?
Neil Muller: It possibly slightly exceeded our expectations, but not by much. Our forecasting and our handle on the business is exceptional. But we did have a better December than anticipated. Fifty-eight per cent of our profit in the UK came from pure-play services - that is professional services and contractual services. That 58 per cent exceeded my expectation by four or five per cent.
This year has gone well in the UK, but has it been tricky to repeat the high growth levels of last year?
It was always going to be hard to repeat the stellar performance of 2012. However, I am very confident that we can continue the momentum that we generated in 2011 and 2012. I therefore expect double-digit profit growth in 2013 for Computacenter UK.
And how about the top line?
My focus is delivering sustainable profit growth for Computacenter through delivering long term customer value. Revenue does not pay the bills - it is the classic sanity over vanity scenario. That said, from a product point of view we will grow the top line by five per cent this year - that is no small task in today's economy. We will grow our services top line by six to seven per cent. This means we are taking significant share.
What has been the key to driving your services growth?
In the services space we are seeing two trends: first and foremost there is the ongoing shift away from monolithic outsourcing arrangements towards tower-based, selective outsourcing requirements. For the last two years that has primarily been in the private sector space. But, as exemplified by some of our recent central government wins, we are now experiencing end-user support growth in the public sector too, as they continue to shift towards a best-of-breed model. As well as end-user support and management contracts, we are also seeing continuing growth in infrastructure projects and services, particularly with workplace modernisation and upgrade projects. Our focus on end-user services in the enterprise marketplace, infrastructure services in the corporate marketplace and infrastructure projects to both enterprise and corporate markets is what will drive the growth rates that I've outlined.
What are the growth areas in the supply-chain product business?
From a supply chain point of view we have experienced a bounce back in the public sector and we continue to experience excellent growth in the high street space of retail banking and retail stores. We continue to penetrate industry and manufacturing as well. That leaves us with the City, which has been slower to bounce back than I would have anticipated in terms of product and services requirements. Fingers crossed that the City bounces back in 2014.
It has been a while since Computacenter made a UK acquisition - is M&A off the table for the time being?
Acquisitions are not off the table for the sake of being off the table. We make acquisitions for one of three reasons - as should any organisation - to enhance capability; to increase our reach; or to attain some synergistic advantage.
At the beginning of this year we thought 2e2 was going to be a great synergistic play for us, as well as adding a little bit of capability here and there. Unfortunately we felt that, commercially, it was not a good deal for us. I do not think there are many synergistic opportunities left at this moment in time, and they do not come along very often. So that leaves us with adding capability or reach. We continue to look at those opportunities that are in line with our strategic directions and our goals of delivering long-term customer value and shareholder value.
Looking at the top 20 or so players in Top VARs, we have seen some big players depart for varying reasons - like 2e2 and Equanet. Softcat and Kelway have stormed up the rankings in recent years, while others like Calyx and Redstone have gone the other way. Do you see the make-up changing quite so much over the next five years?
I still see Computacenter being number one! And I probably see us even growing that gap. I think it is difficult to see the top five changing. Although, that said, it would have been interesting to have asked me 10 years ago - I probably wouldn't have predicted the rise of Kelway and Softcat, which is fair play to both of them within their respective targets markets. I think now it is difficult to see any new entrants, particularly in Computacenter's enterprise space. Will there be any more consolidation? That is something I will be watching with interest - as opposed to appetite.
A year from now, what would you like to be talking about as the key achievements of 2013 and 2014?
I would like the Cabinet Office, central government departments and the rest of our target market to be sat there saying that it is a breath of fresh air working with Computacenter. The companies that exist in the UK IT infrastructure space are highly credible, reliable companies that should be respected. But how it feels to do business with them could be better. I want Computacenter UK to redefine what it should feel like to do business with an IT solutions and services organisation.
And, if you do that, will revenue growth and profit growth fall into place?
Revenue and profit is just a way of keeping score. We are fixated by delivering long term customer value, creating a deep customer fan base, and obtaining world class employee engagement through a clear sense of purpose and belonging. Our customer satisfaction is going from strength to strength and our employee engagement - across a rather large and distributed workforce - is 85 per cent. You cannot deliver that long-term customer value if you do not have an engaged workforce that are prepared to put in the required discretionary effort. That is what differentiates us from the pack - our people, and their passion to delight our customers.
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